Midscale Hotel Brands Fine-Tune F&B

Crafting and then delivering on unique food and beverage concepts for the midscale segment is challenging for operators and brand managers. Restaurants and bars at upscale or luxury hotels typically are true profit centers, while a meal in a limited-service hotel is a low-cost, low-risk self-serve breakfast. Midscale f&b falls between the two extremes. It needs to be profitable, yes, but also executable, usually within the franchised brand competing against many others. Strategies in this segment must be pliable enough to react to shifting tastes, experts say.

Nowhere is this urgency to be fresh more evident than at Holiday Inn, the InterContinental Hotel Group segment leader that continues to refine its Kem's restaurant brand. Named after Holiday founder Kemmons Wilson, Kem's was introduced in 2006 as the signature restaurant for the brand's fresh hotel prototypes.

Sue Morgan, vice president of franchise f&b, IHG, says the Kem's customer has evolved rapidly, from weary travelers hungry for comfort food to health-conscious guests looking for fresh salads and grilled meat. Morgan acknowledges Kem's “had previously been a totally beige restaurant with sconces on the wall.” Some Holiday Inn restaurants, such as one in Yuma, AZ, were actually named Kem's Comfort Food.

The 14 new Kem's scheduled to open in 2008 (25 now operate) embrace a new concept, both visually and in the kitchen. The beige palette is being replaced by organic hues of cyan and wine, quotes from Kemmons Wilson will dress up the walls and the new menu buzz phrases are fresh and cooked to order.

In the new prototypes that are open, two of the most popular menu items are the Cobb and Caesar salads, Morgan says, reflecting a shift from the typical coffee-shop execution of a midscale hotel restaurant concept.

But Holiday is not abandoning traditional food completely; in an ongoing refinement of its Best-4-Breakfast program, Morgan says that the brand continues to keep guests happy first thing in the morning. A significant percentage of people are eating very healthy, but indulgence is also a hot button.

“We know from an industry perspective that omelettes are a big indulgence item,” Morgan says, “and so is cinnamon French toast. We also know that 25 percent to 30 percent of the customers are traditional bacon-and-egg eaters.” Holiday's mission for breakfast is to pay close attention to guest preferences, stay in tune with casual dining trends and listen to what operators are saying, she says, noting that last year's switch to Rainforest Alliance Certified coffee was operator-driven.

Slightly north of Holiday Inn but still midscale is Holiday Inn Select, where the brand's other relatively new f&b concept, the Sporting News Grill, is being deployed. Like Kem's, the Sporting News Grill is undergoing a noticeable tweaking after its third-quarter 2006 opening at the Holiday Inn Select at Dallas/Love Field.

Unlike Kem's, which initially looked like a coffee shop, the Sporting News Grill debuted as a fully realized contemporary sports bar, seeking to distance itself from the no-name hotel sports bars that flow seamlessly in and out of public spaces.

Originally targeting those hard-to-target Gen-X consumers (at the time tagged as 60-percent more likely than their parents to choose a sports bar or sports grill in a hotel), the Sporting News Grill is now positioned to address the broader audience of sports enthusiasts and business travelers. Morgan wants to air out the new concept for a full year, during which she would like to add eight more such eateries to the Holiday Inn Select system.

As with Kem's, the new focus will be on fully developed menus and inventory management systems to make the restaurants easy to operate and suitable for either new construction or rehabs. “We thought of these overall strategies for the entire system,” Morgan says.

Some brands within the midscale with f&b segment are trying to reinvent, not merely tune up, the hotel restaurant concept. The ERL Café (the acronym stands for “Eat. Refresh. Live”) is a combination café, barista station and food mart introduced at the Wyndham Sugar Bay Resort & Spa in St. Thomas. It is now being deployed as a casual dining concept in an increasing number of Wyndham Garden hotels.

Fernando Salazar, vice president, f&b, Wyndham Hotels and Resorts, says that ERL strives to be all things to all guests. It starts in the morning as a coffee bar with breakfast service, becomes an all-day grab-and-go casual dining outlet with hot and cold food, and at night, with an adjustment in fixtures, turns into a wine-by-the-glass bar.

“We are trying to create a venue that is more of a social environment where people can drink coffee or espresso, read a book, grab a sandwich or salad, bottled water or an energy drink,” Salazar says. The ERL also functions as a 24/7 food mart featuring pastry, fruit, yogurt, and alcoholic and non-alcoholic beverages.

In addition to the one at Sugar Bay, there are ERLs in Wyndham Garden hotels in Columbus, GA and Toronto. Fourteen more are in development and they will be a franchise requirement for all Wyndham Gardens under construction. In some cases, they are being inserted into full-service Wyndham hotels.

The main thrust of ERL, however, is to provide midscale operators with the opportunity to serve food and drink without a full kitchen in the back of the house. “All of a sudden, the limited-service hotel becomes a different animal,” Salazar says. Training and equipment are provided to franchisees. Wyndham is also rolling out an organic coffee program through Starbucks, making it the second hotel company (after IHG), to offer organic coffee exclusively.

The heart of the beverage half of the f&b proposition is in the Starbucks coffee program, which adds global branding to the barista with two of the coffee maker's signature blends, Café Estima and Serena Organic, which Salazar describes as universally satisfying, “not typically robust, not too strong.”

Salazar also sees the concept expanding beyond sandwiches and pizza cooked in Turbo Chef ovens. A self-contained fryer would naturally expand the menu, and a prep area would similarly increase options. “This is the future of f&b in a limited-service hotel,” he says.

As the ERLs roll out, Wyndham will add franchisor support in the form of uniforms, logos and other collateral. Lunch menus will be standard throughout the system to create a branded feel and familiarity. “This takes some consistency, but from there, the sky is the limit,” Salazar says.

Another major challenge facing operators is how to use f&b within a midscale property to differentiate it from its competitors. Choice Hotels International's Clarion brand is a portfolio of varied properties, most with restaurants but some without, so it sometimes faces the challenge of implementing f&b strategy by outsourcing. “We're trying to support a portfolio that is varied with service (but) that is consistent across the brand,” says Alexandra Jaritz, vice president of brand strategy at Choice headquarters in Silver Spring, MD.

“The good news is the definition of f&b is changing,” she says. “Based on some of the research I've seen, you don't need three meals a day to have an effective food-and-beverage strategy.” This one-less-meal, a-lot-more-service approach has Clarion moving toward f&b that might go to two meals but require roomservice.

“If the operators cannot do it themselves, we allow them to partner with local restaurants, making sure, first, we deliver a premium service, and second, making that service profitable for an operator who cannot do it onsite,” she says. As with many midscale chains, the viability of the entire f&b strategy comes down to dollars and cents. “The food piece is certainly important, but the key is how to deliver it while still making it profitable.”

Another service being discussed for Clarion is bell service on demand, to further spike the brand's full-service profile. These tweaks in strategy hint at a broader change in Clarion's f&b strategy down the line, she says.

A lot of Clarion brand strategy is coming straight from its owners and operators. “We have a very broad base of franchisees that also operate Hilton and Marriott hotels,” Jaritz says. “We've been able to work with them to find out what has worked and hasn't worked with other brands.”

Jaritz says it is important for Clarion to be able to sell f&b as a self-contained process because research says the flag's baby-boomer target audience wants everything in one building, including “the restaurant, bar and fitness center.

“From a psychographic perspective, our customers tend to be conservative, traveling without kids — and at the end of the day, they want their guest experience to fit squarely under one roof.”

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